Fitch Ratings has downgraded Saudi Arabia’s long-term ratings due to lower estimates for oil prices in the next two years, the US-based ratings agency said.

Saudi Arabia’s long-term foreign and local currency issuer default ratings (IDR) were downgraded to ‘AA-’ from ‘AA’ with Fitch maintaining its negative outlook for the kingdom.

The ratings agency revised its assumptions for crude prices down to $35 a barrel for 2016 and $45 a barrel for 2017.

The government’s deficit widened to 14.8 per cent of GDP in 2015 after a deficit of 2.3 per cent in 2014.

“Fitch forecasts the deficit-to-GDP ratio to narrow only marginally in 2016 and, on the back of a moderate recovery in oil prices, more substantially in 2017,” the ratings agency said.

Riyadh is carrying out a series of fiscal reforms including hiking utilities and fuel prices and raising some taxes. Other reforms will be announced with the National Transformation Programme to boost non-oil revenues.

“The authorities will be careful to sequence fiscal reforms to avoid adverse social consequences,” said Fitch’s downgrade note. “Even if fully implemented, the measures will not prevent a substantial erosion of fiscal and external buffers during 2016 and 2017, although the buffers will still be sufficiently high to constitute an important rating strength.”